Reg Jones Expert's View

Yeah, I know. All the retirement talk among you guys and gals is whether to retire on an immediate annuity (because you already have the normal age and service to do that) or to accept an offer of early retirement (because you meet the reduced age and service requirements). But there are a lot more of you out there who are looking down the barrel of an organizational shakeup or a reduction-in-force, and wonder what your retirement options are. There are two, and I’m here to tell you about them


Deferred Annuity

If you leave government before being eligible to retire on an immediate annuity, you have at least five years of creditable civilian service, and you don’t take a refund of your retirement contributions, you are eligible for a deferred annuity. However, the rules are different for CSRS and FERS.

CSRS: You’d be eligible for a deferred annuity at age 62.

FERS: There are a range of times when you’d be eligible for a deferred annuity: 62 with 5 years of creditable service, 60 with 20, at your minimum retirement age (MRA) with 30 or at your MRA with 10, with a 5 percent reduction for every year you are under age 62 (5/12 percent per month). MRAs range between 55 and 57, depending on your year of birth.

To calculate your deferred annuity, use the standard CSRS and FERS formulas:


0.015 x your highest three years of average salary on the day you left x 5 years of creditable service, plus

0.0175 x your high-3 x 5 years of service, plus

0.02 x your high-3 x all remaining year of service


0.01* x your high-3 x years of service.

* The first multiplier is 0.011 if your annuity begins at age 62 and you have at least 20 years of FERS service.

The good news is that if you apply for a deferred annuity under either CSRS or FERS, you’ll begin receiving annual cost-of-living adjustments starting at age 62.

The bad news is that you won’t be able to reenroll in the Federal Employees Health Benefits or Federal Employees’ Group Life Insurance programs. And, if you are a FERS deferred retiree, you won’t receive the special retirement supplement, which approximates the Social Security benefit you earned while covered by FERS. That’s not a problem for any of you who apply for a deferred retirement at age 62. However, if you are eligible for one before that age, there will be a financial gap that won’t be filled until your regular Social Security benefit kicks in at age 62.

Postponed Annuity

FERS employees are the only ones eligible for a postponed annuity. If you retire under the MRA+10 provision (minimum retirement age plus between 10 and 29 years of service), you can postpone the receipt of your annuity to a later date and reduce or eliminate the 5 percent age penalty.

Your annuity will be calculated using the standard FERS formula (above) and based on your years of service and high-3 on the day you retired. That’s the amount you’ll get when your annuity begins, minus any part of the age penalty that’s left.

Further, if you were enrolled in the FEHB and/or FEGLI programs for the five consecutive years before you retired, when your annuity begins you can reenroll in either or both of those programs.